Adani Enterprises share price analysis points to a 30% dip

on Mar 29, 2023
  • Adani Enterprises stock has come under pressure recently.
  • There are concerns about the company’s ability to pay debts.
  • The stock has formed a double-top pattern on the daily chart.

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Adani Enterprises (NSE: ADANIENT) share price remained under intense pressure this week as concerns for the conglomerate remained. The stock has dropped in the past nine days and is trading at the lowest point since March 2 of this year. In all, it has dropped by ~62% from its highest point this year. Other Adani shares, including Wilmar, Ports, Green Energy, and Power have all slumped.

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The plot thickens

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Adani Enterprises stock price has dropped sharply in the past few weeks as the company continues being a haven for negative headlines. 

Last week, the Financial Times reported how foreign companies with ties to Gautam Adani had invested billions of dollars. The report cited official Foreign Direct Investment (FDI) data, suggesting that the real figure could be much higher than that. It also confirmed allegations that were made by Hindenburg Research in February.

On Tuesday, Bloomberg cited Indian media companies that revealed that Adani was negotiating with its lenders. The report by Economic Times said that the firm was seeking to renegotiate the terms of its $4 billion worth of loans. Another report by The Ken also raised concerns about the company’s financial status.

Adani Group denied these allegations, saying that the reports were based on baseless speculation. Addressing the concerns by The Ken, the company said that it had repaid its share-backed financing worth about $2.15 billion. The firm’s Chief Financial Officer said:

As I wrote on Reliance Industries, Adani also has growth concerns. After doing well in the past few years, the company will likely struggle to maintain this growth trend this year. For one, the management has decided to pause some of its planned investments and acquisitions as it focuses on debt reduction. 

Therefore, even if Adani activities are deemed to be legal and fundamentally sound, the reality is that the firm’s valuation seems to be a bit stretched.

Adani Enterprises share price forecast

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Adani Enterprises share price

Adani chart by TradingView

The daily chart shows that Adani stock price has been in a downward trend in the past few weeks. It remains below all moving averages, signaling that bears are still in control. Most recently, the stock has formed a double-top pattern at 2,168 INR. The neckline of this pattern was at 1,154 INR. 

In price action analysis, this pattern is usually one of the most accurate bearish patterns. It suggests that there have been no bids above 2,168 INR. Therefore, the outlook for the stock is bearish, with the initial target being at 1,154, which is about 30% below the current level.

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